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By Jason Heath, CFP on May 26, 2025
Estimated reading time: 6 minutes

By Jason Heath, CFP on May 26, 2025
Estimated reading time: 6 minutes

Many pre-construction condos bought in recent years, especially in Toronto, are now worth much less. If you can’t close on your condo, here are your options.

Canadian home buyers and investors who bought condos a few years ago are now finding their property values on closing are below their purchase prices. This is not a situation that many envisioned when they bought their pre-construction condos during the post-COVID frenzy.

Nation-wide, condo prices spiked by over 29% between January 2021 and April 2022, according to the Canadian Real Estate Association (CREA). Since the peak in spring 2022, condo prices have fallen 12%. The decline in the Greater Toronto Area (GTA) has been even more pronounced, with CREA reporting condo prices down 19%.

A Toronto condo buyer who bought in spring 2022, at the peak benchmark price of $730,500, may have put down as little as 5%, or $36,525 for a downpayment. The current benchmark condo price of $593,000 (as of April 2025) implies that initial deposit plus more than another $100,000 of value has been wiped out. Even if the buyer still wanted to close on the purchase, their chosen lender might no longer want to finance it.

What options do you have if you’re unable to close on your pre-construction condo? Let’s look at different scenarios.

To determine potential financing, lenders typically use a property’s appraised value at closing—not when the buyer signs the purchase agreement, even if they get a pre-approved mortgage. And when prices drop, buyers may find they cannot borrow as much of the purchase price as they had expected.

Some real estate developers work with banks to provide financing based on the purchase price rather than the appraised value. This may allow a purchaser to borrow more money, but it does not change the fact they may be buying an asset that is “underwater,” with more debt than value.

A buyer in Canada could try to find other sources of financing like savings, borrowing against real estate they already own, or borrowing from........

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